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Execution only platforms (EOPs) may find only a few takers as the existing big direct plan platforms have decided to give it a miss.
India’s two biggest direct plan platforms – Coin by Zerodha and Groww have decided not to become execution only platforms. Instead, they will continue with the existing broking license.
Neelesh Verma, AVP and Product Head, Coin by Zerodha said that his company will continue with the existing broking license to ensure smooth functioning. He believes that his company is exempted from EOP regulations. He said that they have received clarity from a leading exchange platform that existing players who offer mutual funds in demat holding can continue to offer direct plan schemes through their existing broking licenses.
A senior official from Groww also said that they have decided not to charge any fee either from AMC or investors by opting for EOP model. “As a policy, we will continue to offer free services to investors who want to invest in direct plans of mutual funds. Hence, in order to ensure business continuity, we have decided to continue with the existing broking license.”
In June, SEBI introduced two set of norms of EOPs – category 1 EOPs can become agent of AMCs and charge transaction fee from them by obtaining license from AMFI and category 2 EOPs can become representative of investors and charge them directly by taking stock broking license.
SEBI defines EOP as any digital or online platform, which facilitates transactions such as subscription, redemption and switch transactions in direct plans of the schemes of mutual funds.
SEBI had asked all players who are into distribution of direct plan to obtain EOP license by December 01, 2023. However, the market regulator exempted RIAs and brokers from this framework.
